Shopping around for life insurance can be time consuming and intimidating. There are so many options out there from a myriad of insurers. Just because the process is daunting, however, you should not be scared away. Good, affordable life insurance policies can be found, and often times, they are just a few clicks away.
As you may know, life insurance companies will do extensive testing and research on you before issuing a policy. This can include health exams, interviews, and an investigation into your medical records. Often times it may feel like a heavy scrutinizing, but unfortunately, the process is necessary.
The reason life insurance companies do this is to determine your risk. The larger the risk you pose to the insurer, the higher your premiums will be. Keep this in mind when shopping around for your life insurance policy, and familiarize yourself with the factors insurance companies take into consideration when determining your rates.
The Factors That Can Affect Your Life Insurance Rates
The factors listed below may not be all of the things that the underwriters look at to determine your rates, but they are certainly the most important:
Your Age And Your Gender
Many underwriters and financial advisers agree that your age and your gender play the biggest role in determining your life insurance rates. Obviously, the younger you are, the less of a risk you pose to the insurance companies. Additionally, because insurers can collect more premium payments from them, you can expect women to pay lower rates due to their longer life expectancies.
To counteract this, you should apply for life insurance as early as possible. This does not mean that teenagers and school children should all start applying for life insurance. You really only need life insurance if you have people depending on your income to survive. If you get married, have kids, or at least plan on doing so in the near future, then it may be time to start looking to purchase life insurance. People in their 20s can expect the best life insurance rates. If you are already in your 30s or 40s, however, don’t fret. You can still find preferred rates without breaking the bank.
Are You A Smoker?
Smokers pay much more for life insurance than non-smokers. This is the case for nearly all insurance companies. The reason is that smokers are more susceptible to heart disease, lung cancer, emphysema, throat cancer, and many other health risks. Like stated above, the larger your risk to the insurer, the more you can expect to pay. Because of the high likelihood that smokers will die early, life insurance companies have no choice but to make them pay higher premiums for life insurance.
Smokers can expect to pay at least triple what a non-smoker would pay for life insurance. The best way to get better rates, as a smoker, is obviously to quit smoking immediately. While most life insurance companies require you to be smoke-free for at least 3 years to give you preferred rates, others set the bar at only 1 year. Your best bet is to quit smoking now, not only for lower life insurance payments but also for your overall health and well-being.
Your Overall Health And Your Medical Conditions
In the medical exam for life insurance, the doctor will test your urine, blood, lungs, and heart rate. The main “red flags” that they will look for are cancer, heart disease, high cholesterol, digestive disorders, hypertension, high blood pressure, asthma, and diabetes.
Even if you have these medical conditions, it’s not the end of the world when it comes to life insurance rates. Some diseases are treated differently than others depending on the insurer. For example, asthma sufferers or non-insulin dependent diabetics can get the same rates as healthy people as long as they are non-dependent on their medication.
The recommended thing to do is to get a physical exam before your life insurance medical exam. That way, you can get the minor “kinks” worked out before the life insurance exam – the one that counts.
Another “trick” is to use a life insurance company that is familiar with all of the major life insurance firms. That way, you can know which health conditions are weighed differently based on insurer (in hopes to snag a cheap rate based on your own medical history).
Obesity usually comes with a bunch of other health conditions. If the health conditions aren’t present currently, over time, they are bound to pop up for an obese person. Health insurers usually have similar charts that they look at when it comes to weight classes, but like other factors, different companies assign different risks to different classes. If you are “packing it in”, you might want to get rates from a bunch of different insurers to see who gives you the best rates. Obesity definitely can affect life insurance rates though, so if you can get your weight under control before you apply for insurance, you should!
Similar to how a life insurance broker can help you see different underwriting criteria of different companies when it comes to medical conditions, the same can be said about weight. A good broker will tell you which companies have more lenient rules when it comes to obesity. (Pro tip – Women who are overweight should look at insurers who use Unisex weight tables. Men usually weigh more, so this should help!)
Your Family’s Medical History
Most insurers will ask you if anyone in your family has had cancer or heart disease. Being as these two medical conditions can be quite deadly, it’s pretty obvious why a life insurer would care about them. But even if these diseases run in your family, again, it’s not the end of the world.
Some insurance companies will only consider genetic heart disease in their underwriting if your parents or grandparents died of a heart attack at an early age. If your parent died of a heart attack at age 63, for example, you might be in luck because a lot of insurers only consider it a risk factor if the heart disease struck before age 60. This is why it’s important to get quotes from as many life insurance companies as possible. You never know “what’s important” to each company until you actually go and get a quote from them.
Your Driving Record
Driving record is most relevant when determining your auto insurance premiums, but it can also affect your life insurance rates. If you are a reckless driver with lots of accidents and violations “under your belt”, watch out! You can expect red flags to be thrown up on your life insurance application if this is the case. Car accidents are the leading cause of early deaths in the United States, and if you are breaking traffic laws left and right, you can bet your bottom dollar that the life insurance company will take note.
Most life insurance companies will look and see if you had a traffic violation in the past 3 years or a DUI within the past 5 years. Accidents usually won’t “hurt your case” for cheap life insurance unless you were also cited for a traffic violation at the time of the accident (for example – your accident was caused by reckless driving).
If you have a bunch of violations, see if you can get any of them removed from your record. Often times, the DMW will remove them if you complete a drivers-ed class. If not, you might need to wait a few years before applying for life insurance if you expect to get a solid rate!
Your job can also play a role in determining your life insurance premiums. The riskier your profession, the higher your rates. If it’s too risky, you might even be moved into an “uninsurable” class, which makes it impossible to get accepted. To get an idea of the occupations that life insurance companies consider to be too risky, here are a few examples: fisherman, an underground miner, pilot, farmer, rancher, lumberman, oil rig worker, police officer, firefighter.
Again, if you have a risky job, you still should be able to find affordable rates. As long as you aren’t a drug dealer or hitman, you should be able to find rates by using a broker familiar with insurers that insure those with risky jobs.
Your Credit Score
It might not seem fair, but life insurance companies can run a credit check on you in the application process. They are looking to see if you are reliable, trustworthy, and most importantly – are willing and able to pay your premiums. Credit scores can affect every little thing these days, so why wouldn’t life insurance premiums be one of them?
Many companies will not run a credit check before giving you rates. If your credit is an issue and you know about it before searching for life insurance, you should check with a broker to see which insurers will not take this into account. Otherwise, work to improve your credit score before applying.
Just like with risky professions, those who like to live life on the wild side will have trouble securing cheap life insurance. If your hobbies are dangerous, you will have to do due diligence to find affordable rates. Examples of risky hobbies include skydiving, scuba diving, racecar driving, hang gliding, bungee jumping, rock climbing.
If you find yourself often indulging in these thrilling hobbies, it might be time for you to take up safer ones. If not, talk to a broker with experience in finding cheap life insurance for thrill seekers like you.
Your Travel Agenda
Are you planning on heading to the Amazon to do some weird drugs? Are you doing deep into Africa to hunt predators? Are you going to North Korea to spread the word about Jesus? Well, these types of dangerous travel can spell danger for your life insurance rates. Going to a dangerous part of the world may be fun and exciting, but you might be forced to pay higher premiums because of it.
Most life insurance companies will ask on the application if you plan on traveling to risky parts of the world. Don’t lie on this part, because it’s easy to get caught. For example – you might use your credit card overseas, your passport will get stamped, and you might get vaccines from your doctor before your trip (which would, of course, show up on the life insurance medical exam).
Even if you plan on doing this traveling, shop around and get quotes from many different companies. Some insurers only care if you plan on staying in the “high-risk country” for a long period of time, say 4 weeks.
How To Prepare Before Applying For Life Insurance
We mentioned a life insurance medical exam a few times above. The medical exam is a physical exam you will need to undergo to determine your risk class. Although most of the things they look for can’t be fixed overnight, there are a few things you can do to prepare for this exam.
- You can fast for up to 24 hours before exam time. While you might be unbearably hungry in the doctor’s office, at least it might slightly lower your cholesterol. It might even lower it enough to push you into a better risk class!
- You should avoid eating foods high in sodium (like salt), high in caffeine (like coffee), and high in fat (like butter) before the exam. This can lower your blood pressure slightly, especially if you typically drink multiple cups of coffee per day.
- If you are taking medication for things like high cholesterol, high blood pressure, asthma, anxiety, or any other condition, make sure you do not skip your dose near the exam day. You want to have everything under control so that nothing odd shows up on your medical exam results.
- Do not do any sort of intense exercise (like basketball or hockey) before your exam. This will elevate your heart rate and could even give the doctor the impression that you are sick.
- Get a good night’s sleep before the exam and also keep yourself hydrated. Remember – it’s only an exam, so the most important thing you can do for it is show up and relax!
Finally, Getting Some Good Rates
Aside from the factors listed above, most life insurance policies will be priced based on how long you insure for, what type of insurance you get, and how much of a death benefit you need. These things are all decisions you need to make after discussing it with your loved ones and dependents. Once you have decided on the type of life insurance you want and have read the above guidelines to prepare for your application, the only thing left for you to do is shop around.
Like said many times above, the best way to find an affordable rate for your unique situation is to comparison shop. Prices can vary greatly from insurer to insurer, so unless you plan on “striking gold” with your first insurance quote, it’s important to get quotes from multiple insurance companies. To start getting quotes, enter your zip code in the box above. Life Ant is an online life insurance broker that will help connect you to many different life insurance companies so that you can choose the policy that is right for you.